OCR for Invoice Processing – How to Achieve Massive Time Savings

While it might be okay to enter all your invoices as a small business manually, it can become nearly impossible and very time-consuming if you have to enter hundreds of invoices from hundreds of vendors every month. 

Data entry will always be a hassle, even if we have switched to a primarily online system. It can even be dangerous since small mistakes can slip through while hundreds of invoices are processed.

This is why OCR processing software could be the solution your business is looking for. Saving you time, money, and resources. But what is OCR? And how can you use OCR software to process invoices?

What is OCR?

Optical Character Recognition is a computer software that utilizes photoelectric devices to identify and scan specific letters or characters. [1]

OCR software will read information from invoices and enter it into your accounting system. This saves you time and effort by eliminating the need to manually enter data like invoice numbers, customer names, and totals.

Because OCR technology is a kind of artificial intelligence software, it can learn over time. This means it can adapt to the type of invoices you typically use.

So How is OCR Invoice Processing Faster?

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There are a number of ways to speed up your accounting. However, most of them work on the same basic principles. Removing tedious and time consuming tasks from your workflow, e.g., processing invoices, in order to free up time and personnel for more beneficial tasks.

How could switching to an invoice OCR do this? 

Traditionally, both electronic and paper invoices are processed by having your employees collect, sort, and then gradually, line-by-line add all of the important information onto your system. This is incredibly time consuming. In fact, manual data entry is widely considered one of the most tedious tasks among employees.

It may take human eyes a second or two to find the correct invoice data, especially since most vendors will have their own format, and then they will have to double-check it to be sure. OCR software can easily recognize the correct data in invoice processing without double-checking or thinking about it.

Meaning that it can process hundreds of different invoices in a row without becoming bored or making a mistake. As the software sees more invoices, the faster its invoice processing becomes. This means it will get faster and more accurate the more you use it.

Do not worry about a system error; the software can be set up to flag an invoice for review if it notices an issue.

The Benefits of OCR Software

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While the most significant benefit of using OCR in invoice processing is the amount of time saved, there are other significant benefits for your business.

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Less Data Entry means Reduced Costs

Trying to keep up with the growing number of vendor invoices can increase your need for a larger accounting team.

Spending less time on manual data entry means fewer hands are needed.

Increased Productivity

The more menial a task, the longer it will take your personnel to get around and complete it. Speeding up invoice processing for your staff will help them focus on more critical tasks.

Fewer Errors

This technology enables intelligent document processing and invoice data capture, allowing businesses to extract key data from invoices accurately and efficiently. By integrating OCR with accounting software, businesses can automate their invoice processing workflow and minimize errors, saving time and resources in the process.

There’s less chance of someone accidentally missing a comma or placing something in the wrong column. As we know, small mistakes can cause big problems.

Less Time Spent on Duplicates

Invoices must often be put on multiple systems, spreadsheets, or other storage places. OCR can automatically take the data to where it needs to go. Or, in less-automated packages, put this information where employees can easily access it to update the data in the system.

Accounting software

Key data

Intelligent document processing

Invoice data capture

What’s the Catch?

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There isn’t one – Just a few important points to be aware of.

One, it’s still vital to have a manual review step to verify the results and to catch any errors the system might have made. So even though you will have saved a lot of time, it’s still unreasonable to leave it all up to the computers.

Some third party services can make this up for you. For example, Envoice offers features such as ExactExtract, which will check the data for you, and adds some human validation without the hassle—allowing you more confidence in your OCR software’s data.

Two, in addition to the OCR software, you will need a photo-scanning app or an office scanner.  If you’re still receiving paper invoices, then you will need to be able to convert them to an electronic format for the OCR to access them. 

The higher the scanner’s quality, the easier the AI will recognize data and process invoices.

And three, you may be fortunate enough to have staff already familiar with the software. Otherwise, you will need to train them and hire a consulting service for the implementation and upkeep.

How Much Does an OCR System Cost?

Like with most other software, this largely depends on the needs of your business. You will need to figure out how many invoices must be processed each month and what features you need.

Most one time packages will cost between $120 and $160. Some offer monthly subscriptions, ranging from around $15 to $20 per month. There are some very affordable or even free versions available, but the accuracy and quality of the invoice processing will vary with the price.

You will also need to take the time to train your administrators and to install, configure, and train the software to produce an OCR invoice that is to your standard. 

Read On: 10 Best Receipt Scanner Apps In 2023

Conclusion

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Including OCR processing software in your invoice data harvesting strategy is a compelling long-term solution to significantly reduce the time and productivity lost on such a menial task.

OCR software is an AI program working in tandem with scanning hardware, if you’re using paper invoices, that can easily recognize invoice data. A great service if you are dealing with a massive influx of invoices from many vendors.

It needs training to get used to your system and still requires human input to ensure it works efficiently. However, the amount of time and manpower it will save more than makes up for any initial inconvenience or expense.

Article Source:

1 – https://www.ibm.com/cloud/blog/optical-character-recognition